How the loan payment formula works
The standard amortization formula is:
M = P × r × (1+r)^n / ((1+r)^n − 1)
Where P is the principal, r is the monthly rate (APR ÷ 12), and n is the total number of payments (years × 12).
Tips to reduce your total interest
- Pay one extra payment annually — cuts a 30-year loan by ~4 years.
- Round up to the nearest $50 or $100 each month.
- Refinance when rates drop by ≥0.75%.
- Choose a shorter term if you can afford the higher payment.